A crypto-friendly bank founded by the government of Singapore is launching a digital version of the Chinese yuan designed for central bank digital currency (CBDC) payments. According to a new press release by DBS Bank, its Chinese branch will be launching a system that would allow businesses on the mainland to accept CBDC payments. “DBS […]
The post Crypto-Friendly DBS Bank Launches Digital Yuan Designed for CBDC Payments appeared first on The Daily Hodl.
MAS is also working to restrict crypto service providers from facilitating lending or staking for retail customers, but not for institutional ones.
Singapore’s central bank is introducing new measures to improve investor protection and market integrity in the cryptocurrency industry.
On July 3, the Monetary Authority of Singapore (MAS) announced new requirements for crypto service providers to hold customer assets into a statutory trust by year-end.
“This will mitigate the risk of loss or misuse of customers’ assets, and facilitate the recovery of customers’ assets in the event of a DPT service provider’s insolvency,” the regulator said.
The new custody measures follow a public consultation on regulatory measures to reduce risks to consumers from crypto trading which was launched in October 2022. According to the MAS, the consultation received “significant interest” from a wide range of respondents.
In the official response to the public consultation, Singapore’s central bank noted that the majority of respondents agreed that digital payment token service providers (DPTSPs) should be allowed to deposit user assets in the same trust account as the assets of its other users.
“However, a few respondents disagreed, suggesting that DPTSPs should be required to segregate each customer’s assets from other customers’ assets in separate blockchain addresses,” the MAS wrote. According to the respondents, individual custody segregation could provide customers with greater transparency by allowing them to identify and verify their own holdings.
Apart from custody requirements, the MAS also required crypto companies to conduct daily reconciliation of customer assets and keep proper books and records. DPTSPs are also required to maintain access and operational controls to customers’ DPTs in Singapore and ensure that the custody function is operationally independent from other business units.
Additionally, the regulator is also working on a proposal to restrict crypto service providers from facilitating lending or staking of their retail customers’ DPTs. For institutional and accredited investors, however, DPT providers may continue to facilitate such activities.
Related: 3AC liquidators look to recoup $1.3B from founders
The MAS added that some respondents suggested allowing crypto firms to offer lending and staking with the condition of retail customer’s consent and risk disclosures. “Others advocated a ban on these high risk and speculative activities,” the regulator noted, adding:
“MAS will monitor market developments and consumer risk awareness as these evolve, and will take steps to ensure that our measures remain balanced and appropriate.”
The latest investor protection-related regulatory developments in Singapore aim to address industry implosions like FTX, which led to customers losing millions of dollars. Additionally, the crypto lending crisis in 2022 significantly impacted firms in Singapore, with major local firms like Three Arrows Capital and Hodlnaut going bankrupt amid the bear market.
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Project Mariana uses an automated market maker to reduce settlement risk and to create a liquidity pool in place of order books.
The Bank for International Settlements (BIS) Innovation Hub published an interim report on Project Mariana, its collaboration with the central banks of France, Singapore and Switzerland, on the use of wholesale central bank digital currency (wCBDC) in tokenized foreign exchange trading. The project is a proof-of-concept that considers questions relating to credit and settlement risk and interoperability.
Specifically, the project looks at automated market makers (AMMs), token standards and network bridges as it “explores the feasibility of an international FX interbank market using wCBDCs on a blockchain-based network.”
An AMM — a smart contract used in decentralized finance — can implement trading and settlement of tokenized assets in a single step, thus reducing risk. For that to happen, technical specifications have to be developed for the wCBDCs and AMMs themselves, as well as the bridges that serve as the on- and off-ramps between the international network and domestic platforms.
Related: Singapore MAS proposes digital money standards with major industry players
The liquidity pool and a bonding curve are integral parts of the proposed AMM design. A bonding curve is simply the price-fixing function for the assets traded. A liquidity pool can replace the traditional use of order books to match buyers and sellers. In this model, the liquidity pool would be formed by commercial banks with all the currencies involved in the project. Access to the trading system would be controlled by whitelists maintained by the central banks.
1/11 Project Mariana, a collaboration between the BIS Innovation Hub, Bank of France, Monetary Authority of Singapore, and Swiss National Bank, is exploring the use of @CurveFinance' Curve v2 HFMM for on-chain wholesale CBDC pools.
— knows (@evmknows) June 28, 2023
Truly a milestone for TradFi x DeFi innovation pic.twitter.com/IbUCLvxPmN
A different approach to liquidity can be seen in the Singapore Monetary Authority and Federal Reserve Bank of New York’s Project Cedar Phase II x Ubin+, which used a “vehicle currency” in trades between non-tokenized currencies of differing liquidities.
Project Mariana was launched in November. It released its interim report on schedule and promises to release a final report by the end of the year.
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"Decentralized financial ecosystem continues to develop in complexity, and it is important to address emerging risks," said FSA official Mamoru Yanase.
On June 26, Japan's financial regulator, the Financial Services Authority (FSA), announced a partnership with the Monetary Authority of Singapore (MAS) for the joint regulation and pilot testing of cryptocurrency projects in accordance with the latter's "Project Guardian" initiative. The participation will be limited to observer capacity for the FSA in its current phase. Regulators wrote:
"The project aims to test the feasibility of applications of digital technologies such as asset tokenization through pilot experimentations, while managing risks to financial stability and integrity. Current industry pilots include fixed income, foreign exchange, and asset & wealth management."
Established in May 2022 by the MAS, Project Guardian seeks to test the "feasibility of applications in asset tokenisation and DeFi," in accordance with proper regulations. The project has four areas of focus; open and interoperable networks, trust anchors, asset tokenization, and institutional grade DeFi protocols. In one notable project from the initiative:
"DBS Bank, JP Morgan and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions against liquidity pools comprising of tokenised Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD)."
Meanwhile, HSBC, Marketnode, and UOB have since concluded a pilot test of a blockchain-structured product, while UBS is exploring the issuance of Variable Capital Company funds on digital asset networks. Project Guardian isn't the first collaboration between the FSA and MAS. In 2017, the two regulators established a joint fintech cooperation framework to promote innovation in their respective markets.
The collaboration also follows a period of relaxation on crypto laws in Japan. On June 25, Cointelegraph reported that Japan's National Tax Agency ruled to exempt token issuers from a 30% tax on unrealized capital gains. Earlier this year, Japanese prime minister Fumio Kishida said that DAOs and NFTs could help support the government's 'Cool Japan' strategy as it explores Web3 usage.
The report came exactly one year since a court in the British Virgin Islands ordered Three Arrows Capital into liquidation.
Teneo, the liquidators behind bankrupt hedge fund Three Arrows Capital (3AC), are reportedly seeking to recover roughly $1.3 billion in funds from founders Su Zhu and Kyle Davies.
According to a June 27 Bloomberg report, the liquidators claimed Davies and Zhu incurred the $1.3 billion in debt when 3AC was already insolvent, adding to creditors’ losses. 3AC reportedly owed creditors $3.5 billion, making the founders’ potential liability more than a third of the total debt.
A Teneo spokesperson told Cointelegraph that the goal of seeking $1.3 billion from the 3AC founders was “generally reflective” of a June 27 creditor presentation. At the time of publication, court documents did not appear to include this information.
The report came exactly one year since a court in the British Virgin Islands ordered 3AC into liquidation on June 27, 2022. In July 2022, the firm also made a Chapter 15 filing in U.S. Bankruptcy Court in the Southern District of New York.
Though Davies and Zhu have remained active on social media through the liquidation process, their physical whereabouts have been largely unknown. In June, the pair helped launch the Open Exchange, a platform for trading claims against bankrupt crypto entities.
3AC is dead, long live 3AC Ventures https://t.co/61s8uQquOZ
— Kyle Davies (@KyleLDavies) June 21, 2023
Related: 3AC: A $10B hedge fund gone bust with founders on the run
Lawyers for the liquidators in the U.S. have also attempted to make Davies and Zhu answer in court during the bankruptcy proceedings. Both 3AC founders have been issued digital subpoenas, and the legal team sought to hold Davies in contempt of court for having “repeatedly defied their obligations”.
Among the 3AC founders’ former assets included a digital art collection being auctioned off through Sotheby’s. Pieces that were a part of the collection like Dmitri Cherniak’s artwork ‘The Goose’ sold for $6.2 million in June.
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Three trial use cases have been completed as part of the project, and the report uses them as a “framework for consideration” of financial market infrastructure.
As asset tokenization continues at a rapid pace, the Monetary Authority of Singapore (MAS) and 11 financial institutions examined infrastructure models to facilitate tokenized asset trading. The key to unlocking the full benefits of the technology is open and interoperable digital asset networks, the MAS said in its Project Guardian report released June 26.
Project Guardian identified options for platform type, asset type and network access with an eye to best practices. It used three test cases and drew observations on them while carefully noting that it does not endorse any of them.
The first use case was over-the-counter (OTC) foreign exchange transactions. A detailed examination highlighted a collaboration between DBS Bank and SBI Digital Asset Holdings. It concluded:
“Trading in a permissioned liquidity pool protocol achieves greater efficiency by reducing friction and minimising risks, while the tokenised assets bring the benefits of atomic settlement.”
The second use case was trade finance and focused on Standard Chartered Bank’s asset-backed securities tokenization. In this model, tokenized trade finance receivable assets are repackaged as natively issued fungible tokens and divided into two tranches with differing risk exposures. Trading in the “senior,” less risky tokens would “broaden the investor base for real economy assets,” the report concluded.
Related: Tokenization of illiquid assets to reach $16T by 2030: Report
The third use case was OTC-structured notes, which are “a popular wealth management product with substantial traction and demand in Asian wealth centres.” Currently, issuance of such notes is labor-intensive and has manual elements, and the notes require a high level of servicing.
.@MAS_sg published a report proposing a framework for designing open, interoperable networks for #digitalassets. MAS also announced an expansion of Project Guardian to test the potential of asset tokenisation across more financial asset classes.
— MAS (@MAS_sg) June 26, 2023
READ: https://t.co/KXZ8FTqlUp pic.twitter.com/jSnVO9APLM
A network created by HSBC, Marketnode and United Overseas Bank produces OTC-structured notes in a “token factory” by whitelisting parties on a public, permissionless platform, resulting in greater efficiency in creating and distributing the notes. Those institutions are part of an industry-wide effort to establish common standards for asset issuance and exchange.
Project Guardian was launched in May 2022. It will continue to examine “other focused themes of Trust Anchors and Institutional DeFi.”
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The latest regulatory approval for the crypto exchange comes within weeks of getting a MPI license from regulators in Singapore
Singapore based cryptocurrency exchange service provider Crypto.com has obtained a virtual asset service provider (VASP) registration from the Bank of Spain. The regulatory approval would allow the exchange to offer a range of crypto-focused services to customers in Spain, a country which has shown a positive crypto stance in recent times.
The crypto exchange platfrom had to undergo a comprehensive review of its Anti-Money Laundering Directive (AMLD) compliance and adhere to other financial crimes laws before getting the nod. The latest regulatory approval in Spain comes within weeks of obtaining a major payment institution (MPI) license for digital payment token (DPT) services by the Monetary Authority of Singapore (MAS).
We're excited to share our latest regulatory achievement in Europe!
— Crypto.com (@cryptocom) June 23, 2023
We have obtained our Virtual Asset Provider Registration in Spain
Learn more:https://t.co/ZGmgE9n937 pic.twitter.com/fmkWt6npvK
Kris Marszalek, CEO of Crypto.com called its latest entry into the Spanish crypto market a testimony of their “commitment to compliance” while adding:
“We look forward to continuing to work with the Bank of Spain as we launch our products and services in-market and providing users with the comprehensive, safe and secure crypto experience that they desire.”
The latest regulatory approval helped the crypto exchange become a regulated platform in nearly a dozen countries. Apart from Spain, the firm has obtained regulatory nod in Singapore, France, United Kingdom, Dubai, South Korea, Australia, Italy, Greece, Cayman Islands, and a pre-registration undertaking with Ontario Securities Commission and Canada Securities Administrators.
Related: Crypto.com adds Pay support for MATIC, USDC and DAI
Crypto.com like most other crypto businesses, thrived during the 2021-22 bull market, expanding its partnerships into the mainstream and obtaining regulatory approval in multiple jurisdictions. The platfrom made headlines when it obtained naming rights to the very famous Staples Center in Los Angeles. The Staples Center is a multi-purpose arena that has been home to numerous public events including boxing and basketball competitions, as
However, with the advent of the bear market, the platform faced certain business troubles and a fall in demand leading to the closure of its institutional platform in the United States earlier this month.
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The chief executive of payments platform Ripple Labs is commending Singapore for its approach to crypto assets as the firm obtains approval to operate in the nation. In a new press release, Ripple announces that it has obtained an in-principle payments license from the Monetary Authority of Singapore (MAS) which would allow it to offer […]
The post Ripple CEO Brad Garlinghouse Praises Singapore’s Crypto Approach As the Fintech Firm Acquires Payments License appeared first on The Daily Hodl.
The Monetary Authority of Singapore (MAS) has published a whitepaper that proposes conditions for the use of central bank digital currencies (CBDCs), tokenized bank deposits and stablecoins. The whitepaper was produced in collaboration with the International Monetary Fund (IMF), Banca d’Italia, and the Bank of Korea, and is currently paired with a pilot program that […]
The post Amazon Collaborating in Pilot Program for New CBDC Proposed by IMF and Central Banks appeared first on The Daily Hodl.
The Monetary Authority of Singapore, with input from major tech giants, released a whitepaper on the standards for digital money usage such as CBDCs and stablecoins.
The Monetary Authority of Singapore (MAS) released a proposal for a common protocol that would specify the conditions for the use of various types of digital currencies.
On June 21 MAS published a whitepaper that covers technical specifications outlining the lifecycle of its new Purpose Bound Money (PBM) concept, along with the names of financial institutions and fintech firms that plan to pilot PBM.
PBM plans to enable senders of digital currencies across different systems, such as central bank digital currencies (CBDCs) or stablecoins, to be able to specify conditions of digital currency transactions, including a validity period and types of shops.
Mr. Sopnendu Mohanty, the chief fintech officer of MAS, commented that these recent developments have enhanced the role of digital currencies in the future financial landscape.
“This collaboration among industry players and policymakers has helped achieve important advances in settlement efficiency, merchant acquisition, and user experience with the use of digital money."
The paper was developed in collaboration with the International Monetary Fund, Banca d’Italia, and Bank of Korea, among other financial institutions. Fintech firms implementing a trial of PBM include Amazon, DBS and the fintech firm Grab.
Amazon will specifically trial escrow-like arrangements for online retail payments. It will entail the merchant receiving payment only when the customer receives the items purchased.
Related: BIS releases unified-ledger proposal for cross-border, tokenized asset transactions
Additionally, the whitepaper encourages central banks, financial institutions and fintech companies to conduct more research for digital money use cases.
This comes as Singapore continues to embrace crypto-related businesses and activity. On June 7, Circle, the USDC stablecoin provider, joined other major payment institutions to receive a license in Singapore.
A few days prior, Crypto.com also received its license from MAS for digital payment token services.
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